Explosive Accusations Rock the Meme Coin World
The Solana-based token-launch platform Pump.fun has landed in legal hot water, with a sweeping class action lawsuit filed in the Southern District of New York. Plaintiffs claim that the platform operates as an unlicensed, crypto-fueled casino, disguising speculative gambling as meme coin investing.
Estimated damages range between $4 billion and $5.5 billion, while Pump.fun is reported to have generated over $722 million in revenue—largely from user losses.
"Pump Empire" or Coordinated Crime Syndicate?
The lawsuit names Baton Corporation—Pump.fun’s operator—along with its founders Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, and executives from Solana Labs, the Solana Foundation, and Jito Labs.
Plaintiffs Diego Aguilar, Kendall Carnahan, and Michael Okafor accuse them of forming a “Pump Enterprise,” allegedly operating as a racketeering organization under the RICO Act.
According to the complaint, Pump.fun acts like a slot machine in disguise, allowing users to deposit SOL tokens for unpredictable returns, with no KYC (Know Your Customer) or age verification in place—effectively making it accessible to minors.
Rigged Odds and Questionable Practices
Jito Labs is accused of "rigging the game" by prioritizing lucrative transactions and bundling them using Maximal Extractable Value (MEV) strategies—effectively giving high bidders preferential treatment.
Solana Labs and the Solana Foundation are said to enable this system by providing blockchain infrastructure and profiting from validator fees and block space sales tied to each trade.
The lawsuit also calls out the “fair launch” narrative as a smokescreen, alleging that insiders could front-run new tokens via Jito’s backdoor access.
In addition, some meme tokens are accused of violating intellectual property laws by mimicking major brands (e.g., Apple, Tesla, Meta) and celebrity names without permission.
Shockingly, North Korean cybercriminal group Lazarus is also mentioned, allegedly laundering $1.08 million through the platform.
Platform Profit Built on User Losses
Reports show that since May 2024, Pump.fun has earned around $741 million in fees, offloading over 4.1 million SOL tokens through Kraken Exchange.
A staggering 99.6% of users—from a pool of 13.55 million trader addresses—failed to earn more than $10,000 in profits.
The platform takes a 1% fee on every trade, recently adding a 0.05% profit-sharing feature for token creators. Despite this, users continue to bear the brunt of losses.
In 2024 alone, Pump.fun pulled in over $400 million in trading fees, while Jito Labs reportedly collected $633 million in user tips, becoming one of Solana’s top profit-generators.
Jito also operates the “Jito-Solana Block Engine,” selling priority transaction slots and capturing MEV for stakers.
As Solana's value soared over 1,000% from 2022 to late 2024, Solana Labs and the Solana Foundation—who hold massive SOL reserves—reaped significant rewards from heightened activity.
Unregistered Securities & User Losses
The lawsuit identifies 20 tokens, including StakeCoin, QuStream, DeepCore AI, and Apex AI, as unregistered securities.
These tokens were allegedly marketed with promises of real-world use and future value, but without SEC registration or proper disclosure of investment risks.
Lead plaintiff Michael Okafor says he lost $242,076 on tokens that later collapsed.
Despite daily launches of 27,000+ tokens, most are considered low-value and high-risk—a formula that keeps the house winning while retail investors lose.
PUMP Token’s Disastrous Launch
In July 2025, Pump.fun introduced its native token $PUMP, which quickly crashed by 30% within 24 hours, from a peak of $0.0072 to $0.005.
The drop was largely attributed to whale shorting and weak retail confidence.
Within days, $PUMP sank to $0.0031, as early investors dumped their holdings, resulting in collective losses exceeding $1 million.
Founder Alon Cohen’s announcement that no airdrop was planned only worsened sentiment, causing a 14% drop in a single day.
Social Media Suspensions & Rising Competition
In June 2025, X (formerly Twitter) suspended both Pump.fun’s official account and Cohen’s personal account, sparking rumors of upcoming SEC investigations.
The platform also faces multiple suits accusing it of illegally selling unregistered securities disguised as meme coins.
Meanwhile, competitor LetsBonk has captured 44.87% of daily meme coin activity, slightly edging out Pump.fun's 43.73% share.
Legal Remedies Sought by Plaintiffs
Plaintiffs are pushing for:
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Class action certification
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Compensatory and treble damages under RICO laws
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Appointment of a federal equity receiver
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A permanent ban on defendants running similar platforms without licenses or compliance systems
TL;DR Key Points
$5.5B class action filed against Pump.fun
Accused of operating a “meme coin casino” without oversight
Jito Labs allegedly manipulated transactions
Solana-based ecosystem profited despite user losses
Platform failed to verify user age or identity
Native token crashed 50% shortly after launch
Suspensions hint at regulatory trouble
Lawsuit demands strict penalties and oversight
